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Financial Development And Income Distribution: A System Gmm Panel Analysis With Application To Urban China

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  • Zhicheng Liang

    (University of Auvergne)

Abstract

Financial development has strongly influenced the pattern of income distribution in post-reform China. In this paper, using Chinese provincial data over the period of 1986-2000 and applying the Generalized Method of Moment (GMM) techniques, we investigate the finance-inequality nexus in urban China. Empirical results show that China¡¯s financial development significantly helps to reduce urban income inequality. However, these positive distributional gains from financial sector development have been severely offset by the increased urban unemployment and massive layoffs brought about by the implementation of radical urban reforms and the restructuring of state-owned enterprises.

Suggested Citation

  • Zhicheng Liang, 2006. "Financial Development And Income Distribution: A System Gmm Panel Analysis With Application To Urban China," Journal of Economic Development, Chung-Ang Unviersity, Department of Economics, vol. 31(2), pages 1-21, December.
  • Handle: RePEc:jed:journl:v:31:y:2006:i:2:p:1-21
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    References listed on IDEAS

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    More about this item

    Keywords

    Financial Development; Income Inequality; Chinese Economy;
    All these keywords.

    JEL classification:

    • D31 - Microeconomics - - Distribution - - - Personal Income and Wealth Distribution
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • P30 - Economic Systems - - Socialist Institutions and Their Transitions - - - General

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